EDDM vs. Direct Mail
In the research business, I’m often asked about EDDM mailings, specifically how they compare to Direct Mail targeting. EDDM stands for Every Door Direct Mail, and it is a relatively new product offering from the USPS. It’s interesting because it allows the user to go to the USPS’s website and systematically select from a map, which postal routes they would like mail. The marketer will then send their artwork to a local printer while identifying which routes they’ve selected, the postcards will then be printed and finally, the post office will drop them in everyone’s mailbox on the selected routes – including businesses. On the other side of the coin, we have Direct Mail Targeting. Direct Mail Targeting is the process of identifying which households the marketer would like to hit while being very specific about which geography and which demographics they’re interested in targeting. In a slightly different process, the marketer will generally do some form of analysis to identify who and where to target. In this Journal entry, I’d like to take a look at the differences between EDDM and Direct Mail Target Marketing, and how MAR (Market Area Reports) can help decide which to use.
As I mentioned above, using the EDDM process can be very useful for getting the word out about your product offering, but it definitely has some drawbacks that need to be explored. The idea behind EDDM is one that, you don’t care that much about who sees your message, more where the message is being delivered. For instance, if you’re a pizza restaurant, then being targeted with your message, doesn’t really matter as much. The assumption is that everyone needs to eat, and while not everyone may eat pizza on a regular basis, it’s reasonable to assume that most people will eat pizza at some point in the near future. So, it’s a good plan to go to the USPS’s website and be selective about which postal routes you would like to hit. On the other hand, let’s look back at my health club from my previous journal entry – Knowing Your Market Area. It is not reasonable to assume that everyone would be interested in joining the health club that I attend. Joining a health club is a much different investment than ordering a pizza. At the health club, there’s a joining fee, a monthly subscription, the product offering, how far away is it from the home, the current profile of the club, and other factors. It’s important for the Marketing team at the health club to be more targeted with the offer they send out because it’s clear that not everyone is interested in joining a health club.
So when comparing EDDM to Direct Mail Targeting, we need to first decide: is my product/service something that everyone needs/or can use? or is it more of a niche or preference specific? Sometimes it’s not all that easy to tell or decide, so exploring both options may be the way to go.
Let’s look at cost. In most cases, the printing of the postcard is going to be the same cost for both options, and for argument sakes, let’s say that mail services are the same as well. That really just leaves list cost and postage. MAR sells targeted lists for $.045 per name, which includes the direct mail analytics. With EDDM, there’s no cost to buy the list. For the postage, there’s a large difference – a standard for-profit mailing generally costs about $.27 per piece, while EDDM postage costs about $.17 per piece. So all in, the difference between the direct mail list mailing and the EDDM mailing comes to be about $.15 more per piece – On a 10,000 piece mailing, that’s $1,500 – Advantage EDDM.
But let’s look at ROI. Let’s assume that you want to mail 10,000 postcards. We’ve established the cost of the direct mail campaign is going to be $1,500 more than the EDDM mailing. So for the pizza restaurant, again it’s a no-brainer. Say, $.15 for postcards and mailing services and $.17 for postage, and we’re at $3,200 for 10,000 postcards in the mailbox. A pizza restaurant with a good coupon can get up to a 5-6% response, and at $20 per postcard redeemed, that would be $10k generated from a $3,200 investment – not bad. Especially if we say that 10% of those customers regular, repeat orders.
But let’s look at the health club. The average suburban health club with a good offer can generate up to about .75% response on a targeted mailing. So, if the value of a member is $70/month, the average membership length is 9 months, and they get 75 responses, that’s 70($)*9(months)*75(new members)=$47,250 on a $4700 investment. Even a .375% response still generates a nice $23,625. But what if health club decided on an EDDM, instead of the targeted mailing? If we assume that we’ve selected the closest 10,000 names to the club location, then MAR believes that only about 1/4 of them would be recommended as people we would want to target based on simply looking at household income and household composition (married/single and kids/no kids). For most health clubs, they want to take higher income families or higher income households with no kids, depending on what type of club it is. They definitely don’t want high and low income and all household compositions, and unfortunately, with EDDM, there’s no choice. Let’s rerun our ROI for the health club’s EDDM Mailing that generated 18.75 (1/4 response) new members – $3,200 spent, $11,812 returned. Still not bad, but wouldn’t we prefer to spend an additional $1,500 to generate an additional $35,437? And unfortunately, we have to lower the EDDM response a touch more, because we can’t filter out businesses either.
One last point, the assumption of the .75% response is based on a “savvy” marketer, meaning they’ve put some thought into who and where to target. At MAR, using our neighborhood attractive model , we’ll not only pinpoint exactly who you should target based on neighborhood and profile, but you’ll receive a report ranking the neighborhoods in terms of “High, medium and low attractiveness”. At MAR, we recommend pulling just the high attractiveness names, so that you can truly maximize ROI!
I spent a lot of time looking at the numbers which can be somewhat confusing, but the numbers are pretty clear. If you’re a business that fills a niche, or has a customer profile (MAR helps with this too, see our Market Area Report sample ), then the answer is clear – spending a little more on a well-targeted, Direct Mail piece, clearly has the advantage.
Contact MAR today, to begin the process of pulling your targeted direct mail list.
